Question

What is the difference between brand extension and product extension? What are the advantages and problems associated with these strategies?

Answer 1

Brand extension	Product extension
It refers to expansion of brand in to new products and market	It refers to the addition of new products in the existing product line
It diversifies the product portfolio to new categories	It is addition of new product in the existing cateogory
It helps to reach much wider customer base	It has limited scope to reach out to new customer base
It requires more time as evalution and assessment is required	It requires comparatively less time for

Advantages of Brand extension:

· It helps to diversify product portfolio and increase revenue potential for the company

· It minimizes the dependency on few categories and thus is less risky for a business

· It helps employees to be motivated and engaged as they get a chance to work on new products

Disadvantages of Brand extension:

· It involves high capital and resource requirement which can be risky for business

· It takes time as lot of market insight and information is essential

· It may divert the focus of company from core work

Advantages of Product extension:

· It is less risky for the company

· It is easy to implement and helps to meet immediate consumer requirement in the category

· It helps organization to maintain focus on core work

Disadvantages of Product extension:

· It makes business risky due to dependency on few product categories

· It can lower morale and motivation of people due to repetitive nature of work

· It doesn’t help much to leverage company’s brand value in the market